Padini garners positive view on strong set of results
KUCHING: Padini Holdings Bhd’s ( Padini) first nine months of 2017 (9M17) earnings have met expectations, garnering positive views from analysts on the group’s strong set of results.
In a filing on Bursa Malaysia, Padini’s profit for the period for the nine- month ended March 31, 2017 had increased by 17.9 per cent or approximately RM18 million year on year ( y- o-y) to approximately RM118 million.
Padini’s 9M of financial year 2017 ( 9MFY17) cumulat ive earnings met the research arm of MIDF Amanah Investment Bank Bhd’s ( MIDF Research) and consensus full year FY17 expectations, accounting for 73.9 per cent and 76.2 per cent of ful l year forecasts respectively, assisted by the strong performance in the previous quarter.
“Despite a relatively weaker 3QFY17, Padini managed to conclude a commendable result for its 9MFY17 despite the prevailing challenges of unstable ringgit, rising costs of goods and operations,” MIDF Research said.
The group’s 9M17 net profit was also within the research arm of Kenanga Investment Bank Bhd’s ( Kenanga Research) expectations at 79 per cent of its in-house forecast and 76 per cent of consensus.
As expected by Kenanga Research, fourth interim dividend per share ( DPS) of 2.5 sen and special DPS of 1.5 sen was declared, bringing total DPS declared in 9M17 to nine sen.
“We are positive on the strong set of results that was achieved on the back of weak consumer sentiment throughout the year,” the research arm said.
“We believe Padini has adopted the right strategy in focusing on the value- for-money segment in Brand Outlet while the business restructuring in Vincci and Seed has also born fruit.”
Post results, Kenanga Research revised its FY17E and FY18E earnings assumption higher by 8.2 per cent and eight per cent, respectively, as the research arm imputed more positive samestore sales growth coupled with the expansion of new stores.
The research arm believed 4Q17 will bring much stronger sales on the back of Hari Raya Aidilfitri shopping season.
MIDF Research also expected that 4Q17 results will be stronger, driven by the earlier celebration of Hari Raya Puasa in FY17.
Moving forward, Kenanga Research expected the earnings momentum to be sustained, underpinned by the strong brand profile of the group and the continuous expansion in new stores.
“We believe Padini is still on the earnings growth trajectory on the back of new store expansion and established brand names,” the research arm said.
“Dividend yield of 4.4 per cent on the back of sturdy balance sheet and strong operating cash f low should continue to provide support to the share price.”